Money supply:

The central bank of country manages the monetary system of any country. It categorized the money supply of any country into four components. They are:

M₁ = Currency with the public. This comprises coins and currency notes + demand deposits of the public. M1 is also termed as narrow money;

M₂ = M₁ + post office savings deposits;

M₃ = M₁ + Time deposits of public with the banks. M3 is also termed as broad money; and

M₄ =M₃ + net post office deposits.

Note:

Besides savings deposits, people sustain fixed deposits of distinct maturity periods with the post office.

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